Just thought I'd post a few charts I've been looking at for confirmation that from a long term perspective (weekly timeframe) that we hit a major bottom in sentiment for precious metals and precious metal equities.
Not going to make too much comment other than to say these are ratio charts. When they are going up, the commoditie/ETF/Index listed first is going up faster than that listed second and vice versa. They are great for discerning whether risk is 'on' or 'off'
You can note on all three charts that we have recently put in a bottom that has resulted in RSI moving out of an oversold position. The fact that all three have done so at a similar time, on a weekly timeframe leads me to believe its a significant turning point. It's also worth noting that these are 2 year charts and as you can see the RSI on each chart has recently moved from its lowest level in the last 2 years on ALL 3 charts...telling?
Firstly Silver v Gold
Note the rapid rise when silver was far outpacing gold, followed by the subsequent reversal down to the latest turning point. Obviously when Silver outpaces Gold to the upside its 'risk on'
Now GDXJ (The junior gold mining ETF in the US) v GDX (the large cap gold mining ETF in the US)
As with Silver/Gold, when GDXJ outperforms GDX to the upside its 'risk on'
Finally, we all know the majority of the time, gold equities are more likely to rise when the broad market rises, so below is $RUT v $SPX (Russell 2000 Index v S&P500 Index). Again, the Russell outpacing the S&P indicates 'risk on'
As you can see in all three, we've recently moved out of an oversold position on a weekly timeframe, from where 'risk off' had been the recent trend. I'm of the belief that we have put in a significant bottom (although thats not to say we cant re-test it!) and should find that the next six months brings an uptrend to precious metals & stocks and therefore, it should be a pleasant period for precious metal equities.
